Cash For Clunkers Program Blocked - Fight Against Scrappage Continues

The true power of a well-informed and mobilized hobby was on display as thousands of SEMA Action Network (SAN) members responded in force against a national "Cash for Clunkers" program. Efforts were made by some in Congress to include the proposal in the "American Recovery and Reinvestment Act of 2009," also known as the "economic stimulus bill." These attempts were defeated. On February 17, President Obama signed a clunker-free stimulus bill into law.

Cash for Clunkers programs accelerate the normal retirement of vehicles through the purchase of older cars, which are then typically crushed into blocks of scrap metal. For 20 years, Congress has rejected this "sounds good" idea because it fails to spur car sales, reduce vehicle emissions or raise fleet fuel economy.

"Lawmakers in Washington, D.C., heard overwhelming opposition from the enthusiast community against these short-sighted proposals," said SEMA Director of Congressional Affairs Brian Duggan. "While the fight against Cash for Clunkers and other related scrappage bills are far from over, members of Congress now recognize that they will face steadfast opposition from SAN members."

Two proposals were considered during the Senate debate on the economic stimulus bill. The first was an $8 billion program targeting SUVs and pickups of any model year that make less than 18 mpg, such as Chevy Silverados, Dodge Rams, Ford F-Series and Jeep Wranglers. The second would have provided $16 billion worth of cash vouchers toward the purchase of a new vehicle for qualified individuals who allowed their turned-in cars to be destroyed.

The $787 billion stimulus bill included a SAN-supported provision allowing consumers to take a federal deduction for state and local sales/excise taxes paid on the purchase of a new car, light truck, recreational vehicle or motorcycle through 2009. The deduction is phased-out for taxpayers with an adjusted gross income in excess of $125,000 ($250,000 for couples) and applies to car loans up to $49,500.

For 2009 and 2010, the stimulus bill also provides a refundable annual tax credit of up to $400 for working individuals and $800 for working families, phased-out for taxpayers with adjusted gross income beyond $75,000 ($150,000 couples). Workers will receive this benefit through a reduction in the amount of income tax that is withheld from their paychecks or by claiming the credit on their tax returns. The Treasury Department will be adjusting the payroll withholding tables to reflect the change.

"I am truly impressed by the passion SAN members have for this hobby and their dedication in protecting it from legislative threats," said Duggan. "While we celebrate this victory by keeping Cash for Clunkers out of the stimulus bill, SAN members are urged to remain vigilant as we collectively work to protect this great American tradition."